In one of the largest crackdowns on illegal online gaming operations in recent months, authorities have dismantled a sprawling ₹13,000-crore network allegedly run through shell entities, fabricated digital identities, and compromised financial infrastructure. The operation led to the arrest of Hyderabad-based fintech entrepreneur Pankaj Kumar, officials confirmed on Thursday.
Kumar, who founded Adsum Advisory Services Private Limited, was apprehended on Wednesday evening by the Directorate General of GST Intelligence (DGGI) and subsequently remanded to judicial custody.
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Allegations of Fraudulent KYC and Merchant Onboarding
According to investigators, Adsum Advisory Services allegedly played a pivotal role in enabling shell companies to access regulated banking channels. The firm is accused of clearing fraudulent Know Your Customer (KYC) verifications and facilitating the onboarding of dubious entities onto UPI-based payment systems.
Officials claim that these shell firms were integrated into banking networks overseen by the Reserve Bank of India, allowing large-scale routing of funds connected to real-money gaming platforms. The investigation suggests that mandatory merchant risk profiling and due diligence checks were either diluted or bypassed altogether, allegedly in exchange for financial incentives linked to the syndicate.
DGGI sources stated that Adsum provided third-party fraud detection and digital customer verification services. However, instead of acting as a compliance safeguard, the firm allegedly enabled the entry of shell companies into the payment ecosystem, creating a conduit for illicit transactions.
Massive Network of Shell Entities
The probe began after the DGGI received intelligence inputs regarding online platforms offering real-money gaming services in and around Hyderabad. Investigators initially identified two websites—funinmatch360.com and racejeet247.com—and began tracing the outward flow of funds.
As scrutiny deepened, authorities reportedly uncovered a coordinated syndicate operating multiple illegal gaming portals with the assistance of financial intermediaries. These intermediaries allegedly included payment aggregators, payment gateways, and technology service providers.
Investigators have identified nearly 100 shell entities across India that were allegedly used to process gaming-related transactions. Many of these firms reportedly filed GST returns declaring negligible revenue, despite handling disproportionately large transaction volumes—raising red flags during financial analysis.
Alleged Misuse of Banking APIs
Officials also pointed to the alleged misuse of banks’ payout APIs by certain technology service providers posing as legitimate fintech operators. These APIs, designed for bulk and automated transfers, can process payments without one-time passwords (OTPs) or manual authentication when accessed by authorised clients.
Investigators believe such systems were exploited to facilitate rapid and large-scale movement of funds linked to illegal gaming proceeds, thereby bypassing conventional transaction monitoring safeguards.
Accounts Frozen, Arrests Made
So far, bank accounts holding approximately ₹100 crore have been frozen as part of the investigation. Multiple individuals have been arrested in connection with the case, and the probe is expanding to examine the role of additional financial intermediaries.
Officials described the operation as part of a broader enforcement drive targeting illegal online gaming platforms and their financial backers. India’s online gaming industry is estimated to touch nearly $23 billion (around ₹2 lakh crore) by 2025, making it one of the fastest-growing digital sectors—while also presenting significant regulatory and compliance challenges.
Authorities indicated that further arrests and financial attachments may follow as the investigation continues.
